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Why should you invest on dividend stocks?

Why is it important the increase of dividend amount?

There is a share of 10€ that pays an annual dividend od 4,0%, 0,40€. Imagin that you invest 10.000€ buying 1.000 shares. If the dividend incresa on a 6% yearly and the price increase in the same amount, the result after years will be:

Year

Price

Investment

Dividend

Amount

%

0

10,00

10.000,00

0,40

4,0%

1

10,60

10.600,00

0,42

4,0%

2

11,24

11.236,00

0,45

4,0%

3

11,91

11.910,16

0,48

4,0%

4

12,62

12.624,77

0,50

4,0%

5

13,38

13.382,26

0,54

4,0%

7

15,04

15.036,30

0,60

4,0%

10

17,91

17.908,48

0,72

4,0%

15

23,97

23.965,58

0,96

4,0%

20

32,07

32.071,35

1,28

4,0%

the key points for investors that give inportance to dividends are:

  • After 20 years, the dividend yield will continue being 4,0% of share price, but if syou conpare it with the initial amount invested, the dividend 1,28€ would be 1.280€ for the 1.000 shares bought.
  • This amount is a annual dividend yield of 12,8%.
  • Also, after 20 years, the shares bought for 10.000€ would be valued at 32.070€.

Information partialy obtain form Wikipedia

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